Maximizing Revenue: A Comprehensive Guide to OTT Monetization
Streaming video content is not a service for the future anymore but an ongoing reality that traditional operators will need to adapt to in order to keep up with user demands and further monetize their large subscriber networks.
In an era where digital entertainment reigns supreme, the monetization of OTT technology has become an indispensable facet of the broadcasting landscape. The surge in streaming services has transformed not only how we consume content but also how traditional operators must adapt to thrive in this dynamic ecosystem. In this comprehensive guide, we'll unravel the world of OTT monetization and delve into strategies that can redefine the future of content delivery.
The statistics speak volumes about the seismic shift in viewer preferences. According to a report by the Pew Research Center, the percentage of Americans who exclusively consume streaming content has surged from 24% to 44%. Furthermore, the global online streaming services market is projected to expand by a remarkable USD 149.96 billion, showcasing a compound annual growth rate (CAGR) of over 18% during the period of 2020–2024 (Technavio). These statistics underscore the growing shift toward OTT consumption and the extraordinary potential it holds for industry players.
In this guide, we will embark on a journey through the OTT landscape, exploring its intricacies, strategies, and best practices that will empower broadcasters, video streaming operators, telecoms, MVNOs, content owners, and other stakeholders to tap into the lucrative realm of OTT monetization.
With the emergence of different OTT services (YouTube, Netflix, Disney+, Amazon Prime, and other pay-TV streaming services), millions of subscribers are accessing video content over the internet. These companies follow different monetization models in order to increase subscriber growth and improve their chances of monetization success.
We will cover several monetization options in the following chapters
Understanding OTT Technology
At its core, OTT technology represents a paradigm shift in the world of broadcasting. It's not merely a buzzword; it's a transformative force reshaping the way content is delivered and consumed. OTT refers to the transmission of video, audio, and other forms of media content over the Internet, bypassing traditional methods like cable or satellite. This approach empowers viewers to access their favorite content on a diverse array of devices, from smart TVs and smartphones to tablets and laptops. OTT technology has ushered in a new era where the internet becomes the conduit for content delivery, liberating viewers from the confines of traditional television sets.
Diverging From Tradition
To grasp the significance of OTT, we must first appreciate how it diverges from the established norms of TV broadcasting. In the traditional television model, viewers require a television set connected to a cable or satellite network to access content. This dependence on hardware and infrastructure limits flexibility and often comes with geographic restrictions. OTT, on the other hand, leverages the public internet and an array of connected devices to deliver content. This means viewers can enjoy their favorite shows, movies, and more virtually anywhere, without the need for dedicated hardware or location-based limitations. OTT's flexibility and accessibility have revolutionized the way we consume media.
The Devices of OTT
One of the remarkable features of OTT technology is its device agnosticism. In the OTT realm, content is king, and viewers have the freedom to choose their preferred screens. Whether it's a Smart TV in the living room, a smartphone during the daily commute, a tablet at the café, or a laptop in the office, OTT content is accessible across a wide spectrum of devices. This versatility not only caters to diverse viewing habits but also opens up new avenues for content creators and distributors to reach their audiences. It's a world where viewers are in control and content adapts to their lifestyles.
While OTT technology is often associated with video content, its reach extends far beyond the world of movies and TV shows. OTT encompasses a diverse range of digital communication services, including audio streaming and messaging platforms. This means that in addition to binge-watching your favorite series, you can seamlessly tune into music and podcasts, engage in real-time conversations with friends and family, and much more—all through the same OTT infrastructure. The evolution of OTT has blurred the lines between entertainment, communication, and information dissemination, making it a multifaceted powerhouse in the digital landscape.
Most commonly, OTT is associated with VOD (Video on Demand) platforms but also refers to audio streaming, messaging services, or internet-based voice calling solutions (VoIP).
With the growing popularity of OTT services, there are multiple possibilities available on how different network operators can monetize their video delivery services.
If you would like to learn more about OTT from a technology perspective, check out this whitepaper "How to start an IPTV/OTT service"
Okay, so we've laid the groundwork for our exploration of OTT monetization, which is one of the most important goals for OTT providers. By understanding the essence of OTT technology, you're now better equipped to navigate the dynamic world of OTT content delivery and discover the myriad opportunities it offers for monetization. As we delve deeper into the following chapters, we'll explore the strategies and best practices that can help you unlock the full potential of OTT monetization in the digital age. Stay tuned for insights that can reshape your approach to content delivery and help you decide on the best OTT monetization revenue model for your video streaming service.
What content can be monetized?
In the ever-evolving landscape of OTT technology, one of the most compelling aspects is the diverse range of content that can be monetized. OTT opens the door to a world of possibilities for content creators and distributors. From blockbuster movies, premium shows, and TV series to niche documentaries, educational videos, and user-generated content, virtually any form of media can find its place in the OTT ecosystem. This vast expanse of content is not limited to a single genre or format, making it an inclusive playground for both established players and emerging content creators to thrive. Whether your focus is on entertainment, education, or information, OTT offers a canvas where your content can be transformed into OTT revenue.
Exploring the Popularity of Live Streaming
While the majority of the OTT content is handled through VOD-based platforms such as Netflix, YouTube, Disney+, Hulu, and similar, live streams are often delivered with OTT technology. This has become increasingly popular with live TV services enriched with interactivity functions such as Catch-Up TV and Timeshift. Live streaming has emerged as a dynamic and immensely popular facet of OTT content delivery. Viewers are no longer confined to traditional broadcast schedules; they can now experience real-time events, sports, concerts, conferences, and more through OTT platforms. The allure of live streaming lies in its immediacy and interactivity. It creates a sense of connection and engagement that transcends geographical boundaries. For content creators, live streaming presents a unique opportunity to monetize content as it unfolds, whether through ticketed access to exclusive live events or through advertising during high-demand live broadcasts. The monetization potential of live streaming is a testament to OTT's ability to adapt to the changing dynamics of audience preferences.
It is possible to monetize both live and on-demand content. Some services use only live content, other services only on-demand content, but it is also possible to monetize a combination of both live TV and on-demand services.
Highlighting the Versatility of Monetization Models
In the world of OTT, video monetization options are not limited to a single path. One of the distinguishing features of OTT is its flexibility in accommodating various monetization models. Beyond live streaming experiences, on-demand content remains a cornerstone of OTT platforms. The beauty lies in the fact that both live and on-demand content can be monetized, often in tandem. Operators have the option to curate libraries of on-demand content, catering to viewers' preferences for binge-watching series, exploring documentaries, or catching up on missed episodes. Whether it's subscription-based models (subscription services), advertising-driven strategies (AVOD models), or transactional approaches, the possibilities are diverse and adaptable. OTT's ability to combine these monetization methods offers operators the agility to cater to a wide range of audience preferences.
The richness of OTT lies not only in its content diversity but also in its adaptability to different forms of monetization. As we delve deeper into the subsequent chapters, we'll unravel the intricacies of specific monetization strategies, including subscription-based models, advertising-driven approaches, and transactional methods.
Monetization Strategies for Operators
As OTT technology continues to redefine the broadcasting landscape, operators are presented with a spectrum of monetization strategies to harness its full potential. In this chapter, we delve into the three primary monetization strategies that empower OTT operators to thrive in the digital age.
Subscription-based monetization model (SVOD)
Subscription Video on Demand (SVOD) represents one of the most prevalent monetization models within the OTT ecosystem. Under this strategy, users subscribe to specific packages or tiers of service in exchange for access to a library of content. SVOD services like Netflix, Amazon Prime, and Disney+ have masterfully employed this model, offering viewers the choice of a vast content catalog at a fixed monthly fee. Moreover, some SVOD services provide tiered pricing options that allow multiple devices to stream simultaneously on a single subscription. This flexibility caters to various user preferences and household dynamics. Notably, the ad-free viewing option, as seen with YouTube Premium, serves as a prime example of how SVOD can cater to diverse preferences.
Advertising-based monetization model (AVOD and FAST)
Advertising has been a cornerstone of monetization for decades, and in the realm of OTT, it takes the form of Advertising-based Video on Demand (AVOD). In AVOD models, users gain access to content libraries free of charge, but in return, they are exposed to advertisements during content consumption.
Unlike traditional TV, where ad engagement feedback is minimal, OTT technologies enable operators to collect valuable data and analytics on viewers' consumption habits. This data forms the basis for targeted advertising, enhancing the viewing experience, and optimizing ad reach. What is interesting with ad-based services is the option where the platform would push personalized ads to users while they were watching the service.
AVOD services may offer personalized ads tailored to individual interests, significantly increasing the value proposition for both viewers and advertisers. Additionally, AVOD services may choose to offer premium, ad-free viewing options or operate as freemium services where ads subsidize the cost of content access.
As for advertising dynamics, normally, ads cannot be skipped. Users have to watch the entire ad or part of the ad before they can continue watching content. Ads can be added before the beginning of the content (pre-roll), added during the content play (mid-roll), and also at the end of the content (post-roll).
All these features enable operators to either charge extra fees to advertisers for advertising distribution (up to 10x more valuable than traditional ad delivery) or the service can be offered as a “freemium service”, where users are not paying for the service in exchange for ad viewing.
Transaction-based monetization model (TVOD)
The transactional method of monetization is where viewers pay for each content file they choose to watch. In the case of live TV events, this method is most commonly referred to as Pay-Per-View (PPV). This model gives the end-user a lot of flexibility as the viewer only pays for the content that is chosen.
Operators often use this model to upsell services that are not necessarily in the basic subscriber package and, in this way, generate additional revenue.
Transaction-based monetization is done through “TV Store” functions where defined products are offered to the viewers in order to enable certain features or content. This method is getting increasingly popular with Premium VOD content where debut films are offered outside subscription packages for a one-time fee.
Hybrid Models and Tiered Pricing
It's essential to recognize that the OTT monetization landscape is not confined to these individual strategies; operators often employ hybrid models that combine elements of SVOD, AVOD, and TVOD to cater to diverse audiences. Hybrid approaches enable operators to maximize revenue streams while accommodating viewer preferences. Additionally, tiered pricing options within SVOD models allow for customization, granting viewers the flexibility to choose packages that align with their viewing habits and budget.
In the dynamic world of OTT monetization, the choice of strategy can significantly impact an operator's success. Each model has its unique advantages and considerations, and the versatility to adapt and combine these strategies is a key asset in navigating the evolving digital media landscape.
Best practices when monetizing OTT content
In order for an operator to be successful with the monetization methods described above, it needs to consider several other aspects as well. The OTT platform needs to enable several adaptive measures for the operator to ripe full benefits.
Secure Video Delivery
When choosing a video platform where an operator will distribute the content over the internet it is important that the video delivery is safe and secure. Especially when you are monetizing the content, it is extremely important the content is protected from any piracy intercepts which could copy and distribute content material. This is not only required from the safety perspective but also a requirement from the content owners.
Having a marketing plan is the driving force that would enable the inflow of subscribers to the service. It needs to be properly planned and packaged with exciting content and a proactive service offering. The activities that will represent marketing efforts, will create buzz and excitement and help the service to monetize and grow.
For more information on marketing strategy for IPTV/OTT services read the blog in the link and download our comprehensive whitepaper.
Content & Service Design
There is a nice saying in the TV industry that says: Content is king! It is true that content is the main driver of a successful OTT service and it is no coincidence that OTT services (Netflix, Disney+, Amazon Prime, etc.) allocate huge amounts of budgets for the original content creation. Original content attracts subscribers, and once they are subscribed, the extensive library of content keeps viewers interested in staying for more.
For Broadcasters and pay TV operators it is crucial that they offer exciting packages of live TV & on-demand content (Catch-Up TV, Timeshift functions, and on-demand content). In addition, the upsell options need to be interesting enough to provide a tangible push for new package acquisition with users.
In cooperation with our content partners we can help the operators get attractive live and VOD content.
UniqCast is an E2E Turnkey Video delivery Solution Provider. We help operators to deploy, manage and monetize their content in cost efficient and interactive ways. Operators normally lack experience when it comes to different options of content monetization and this is where UniqCast experience comes in place. In the course of OTT project delivery, UniqCast helps operators with service design, creation of content packages, monetization strategies, and service launch.
Want to discuss your OTT monetization requirements? Get in touch with me through email@example.com
UniqCast suggests reading next: ‘How to start an IPTV/OTT service’ whitepaper